Trading with point and figure

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- Busier day for US data accompanied by a raft of central speakers and
govt bond auctions, post AHCA 'fail' and quarter end flows likely to
be dominant factor

- US Trade Balance: modestly narrower deficit expected, focus on pace of
export and import growth, following January industrial supply imports
surge

- US Consumer Confidence: expected to slip marginally from 16-yr high,
labour differential in focus

..........................................................................

********************
** EVENTS PREVIEW **
********************

A relatively busy day for statistics and central bank speakers may struggle with the conflated influences of the US AHCA fail / Trump-flation doubts and quarter end related flows. Topping the data schedule are the US Consumer Confidence and Advance Goods Trade Balance, with Case Shiller House Prices, Richmond Fed Manufacturing survey and Italian Industrial Orders providing the accompaniment. On the central bank front, the ever erudite Debelle (RBA) is followed by the 'inflation nutter king', Riksbank governor Ingves, BoC's Poloz, ECB's Visco and a raft of Fed speakers, including Yellen, though her topic suggests that she will not make any specific reference to the policy or economic outlook. As a pick up corporate bond issuance looks to tap quarter end flows, governments will also have a busier day for auctions 2-yr sales in Germany and Italy (zero), while the UK and US both offer 5-yr paper. For all that the pre- and post-AHCA 'fail' tone in equity markets has been soft, the 'Trump slump' narrative is an ugly piece of hyperbole. As but one example, the seven consecutive day fall in the Dow Industrials in the week to Friday amounted to a cumulative -1.69%, which is the third smallest 7-day setback in the history of the index.

** U.S.A. Feb Goods Trade Balance / Mar Consumer Confidence **
- The advance Goods Trade deficit is forecast to narrow modestly $-66.6 Bln from January's wider than expected $-68.8 Bln, which would suggest that Net Exports would deduct from Q1 GDP, as it did in Q4, and by extension likely play into Trump's protectionist leanings. That said, the month on month change in both exports and imports will be the more significant signal on the overall performance of the economy, with January's wider deficit mostly attributable to a jump in imports of industrial supplies, which implies a solid pace of equipment Capex. The Conference Board's Consumer Confidence measure is expected to slip back from February's 16-yr high of 114.8 to 113.6, which would still be the second highest reading for the past 16 years. Much way well depend on the Expectations component which has been 'choppy' since hitting its cyclical high of 106.4 in December, dropping to 99.3 in January before recovering to 102.4. A firm labour market, a modest drop in gasoline prices and ongoing optimism about the economic outlook should all offer continued support, even if the media sturm und drang around the Health Care Act could prove to be a wildcard influence. While labour demand is clearly solid, and the Labour differential (Jobs plentiful minus hard to get) is at its cyclical high, it remains well below levels that have historically signalled strong labour demand, which probably indicates that while jobs are being created, many are low paid and tenure is perceived to be fragile.

from Marc Ostwald
 
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